Royal Mail’s Christmas woes blamed on Brexit
ROYAL Mail has revealed a sharp drop in letter mailing in the busy festive season as business worries over Brexit hit marketing post.
The group said the number of addressed letters tumbled 6% in the nine months to December 25, while letter revenues fell 5%.
This comes after a 4% fall in letter numbers in its first half.
Royal Mail, which employs 7,000 people in Wales, said: “We are seeing the impact of overall business uncertainty in the UK on letter volumes, in particular advertising and business letters.”
The group signalled an impact from Brexit fears on its letters arm in half-year results in November, when revenues from advertising mail slumped 8%.
It said the trend for marketing mail revenues had remained “broadly similar” in the third quarter.
This offset a stronger performance from its parcels business, which notched up a 3% rise in revenues over the nine months to Christmas Day, with the number of parcels delivered up 2%.
Overall revenues across its UK parcels and letters division fell 2%.
However, its European parcels business, General Logistics Systems (GLS), saw a strong festive quarter
Royal Mail said no decisions would be made until after the consultation closes on March 10.
The group added: “Royal Mail has considered members’ views, and discussed responses with its unions as part of the pension review process.
“Royal Mail will write to members again once it has made a decision.”
Unite union officer Brian Scott said: “The trading update confirms the hard work and commitment of our members to deliver a good service to the public in the run-up to Christmas.
“However, it is extremely disappointing that Royal Mail is boasting about paying employees £500 in dividends when at the same time they are seeking to close their pension scheme, which will cost those same employees thousands of pounds in hard-earned pension benefits.”
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “Letters are in terminal decline and the parcels industry is looking increasingly crowded.
“Combined with uncertainty around the health of the wider UK economy, which has resulted in steadily falling business mailings, this makes for a pretty unpleasant background in which to be doing business.” THE FTSE 100 continued its slide yesterday as a stronger pound and disappointing Royal Mail earnings dragged on the index.
London’s top tier fell 0.5% or 39.17 points to close at 7,208.44, hit in part by a 0.5% rise in sterling versus the dollar to 1.232. The pound rose more than 0.4% to 1.158 against the euro, which was under pressure after the European Central Bank kept interest rates on hold and played down signs of inflation across the eurozone.
Multinational stocks on the blue chip index tend to benefit when international currencies are stronger.
Royal Mail revealed a 6% drop in letter mailing in the nine months to December 25, while business worries over Brexit hit marketing post. It said letter revenues fell 5% over the period.
Across Europe, the French CAC 40 fell 0.25% while the German Dax was flat.
In oil markets, Brent crude prices fell 0.5% at around $53.94 per barrel (£43.84), after a surprise rise in US stockpiles.
In UK stocks, Aviva shares dropped 2.4p to 476.3p after the life and pensions giant announced it was merging its UK insurance businesses as part of a shake-up that has sparked the departure of its European boss.
Barratt Development shares dropped 11p to 505.5p as the firm announced that chief financial officer Neil Cooper would step down “by mutual agreement” with immediate affect, after just over a year in the job. No further information regarding the reason for his departure was released.
Moneysupermarket Group shares soared 24.1p to 327.1p as turnover rose 20% in the fourth quarter. The company now expects a 12% jump in full-year revenue to £316m. It also confirmed that former John Lewis retail director Mark Lewis will take over as chief executive on April 10.
Shares in Pets At Home sank 25.5p to 212.9p after the company said “subdued trading” at its merchandise division dragged on like-for-like sales, which dipped 0.5%, in the third quarter.
Shares in bicycles to car parts chain Halfords shot up 31.8p to 385p after reporting that total sales rose 11.4% in the 15 weeks to January 13.
The biggest risers on the FTSE 100 were Pearson up 15.5p to 588.5p, British American Tobacco up 100p to 4,734p, London Stock Exchange Group up 57p to 3,010p, and Smurfit Kappa Group up 29p to 2,089p.
The biggest fallers on the FTSE 100 were Royal Mail down 26.9p to 422.5p, British Land Company down 22.5p to 595.5p, Fresnillo down 49p to 1,398p, and Anglo American down 41p to 1,302p.